Dr. Kai-Fu Lee, Google's new President of Chinese operations and head of the new Google China Research and Development center, previously worked as a corporate vice president for Microsoft's Natural Interactive Services Division. Now he's at the center of a lawsuit against Google filed yesterday by Microsoft because Microsoft alleges that he has “direct knowledge” of its search technologies. MS believes it had no choice but to file the lawsuit to protect its intellectual property. The case centers on an employee confidentiality and non-compete agreement signed by Dr. Lee when he was hired by Microsoft.

The Google China Research and Development Center is slated to open in the third quarter of 2005. According to Google's press release, Dr. Lee is a pioneer in the areas of speech recognition and artificial intelligence. He is also responsible for founding Microsoft Research China in the late 1990s, in addition to holding positions with Silicon Graphics, Apple, and Carnegie Mellon University, where he served as an assistant professor.

BRIAN'S OPINION
If I were Microsoft, I would be a little nervous as well. It sounds as if Dr. Lee is serving in the very same capacity for Google that he served with Microsoft, and though Dr. Lee signed a confidentiality and non-compete agreement, these agreements are very hard to enforce. The one thing Microsoft has going for it is the fact that the position Dr. Lee took with Google sounds almost like a cookie-cutter copy of the position he held with Microsoft. I expect this one to be settled out of court, with Dr. Lee affirming that he will keep confidential any trade secrets belonging to Microsoft.

The biggest motivation behind the lawsuit involving Dr. Lee is to scare other Microsoft employees from jumping ship to rival Google as well. I am not saying that Microsoft doesn't have a justified reason behind pursuing the lawsuit; I am just saying that there are other motivating factors as well.

yeah(12:34pm EST Wed Jul 20 2005)oh please, the guy might have the search engine concepts in his head, but i dont think he has all the source code of the search engine pasted in his brain. he was not the only one working in that microsoft department. – by bla

Uh…(12:35pm EST Wed Jul 20 2005)“no grounds for suing”

Yes, there is. It's called a “contract.”– by Zinner

bh(12:47pm EST Wed Jul 20 2005)I think MS may have a legitimate beef with Dr. Lee but proving that Google is at fault is anouther matter.Google never signed the contract. Besides if they ship him to China im sure that doesnt violate any American Laws..As the contract would only apply in the US. Canada had a ruling that these contracts are violation of ones freedoms and rights..so most of thoughs types of contracts can be dissmissed in Canada. – by Phreak

Maybe Mole?(1:20pm EST Wed Jul 20 2005)Google runs great with MS influence I think we can expect some loss. What MS should worry about is if Google hires to the top Apple people…MS then you have a problem. – by EDV

There are already laws concerning trade secrets, copyrights, patents, national security.. etc. I hope this kind of crap explodes in human resources faces, or at least burns in a bag on the doorstep.

As I told one previous employer – to limit my future employment possibilities such as you have stated here, I would require wages that would compare to pro athletes, or at a minimum – reimbursment for all my schooling and previous work experience.

Liberal use of white-out was negotiated and I still, reluctantly, signed the document. – by Zeke

Zeke is Right..(3:21pm EST Wed Jul 20 2005)No one, no company, has the right to tell you how you can think, act, and live. Writing into a contract that you are not allowed to use your brain in future employment is rediculous. It is a false barrier to employment, and a no one has the right to cripple your income or employability.

If a company wants to keep its secrets, it just better damn well pay decent and treat its employees good enough that they want to stay in the first place. 99% of them don't, and so comes the roots of this stupid concept of non-compete clauses. Treating your staff like crap does not then guarantee you the right to hobble them for the rest of their lives. – by NonCompeteTHIS!

RE NonCompeteTHIS!(4:02pm EST Wed Jul 20 2005)Obviously you have never been under one of these agreements. It is very rare that the agreements hobble you for more than two years, and usually there is a geographical limit to their enforcement also. These agreements are essential to prevent companies loosing all of their research investments (read millions of dollars) by a secondary company waiting and then headhunting the project head for a hefty salary (read thousands of dollars). I am under a agreement and do not find it to be a burden. – by PocketPC Fan

copyleft(4:10pm EST Wed Jul 20 2005)Contrary to common misperceptions, courts generally uphold these non-compete clauses if they comply with acceptable standards. Some states — notably California and, to a lesser extent, New York — impose substantial restrictions. In California, they generally are not enforceable at all. In New York, their enforceability is quite limited.

But in most states, reasonable agreements are enforced by the courts through orders that prohibit employees from engaging in conduct that violates non-competes. Employers also can be held liable if they hire someone who violates an agreement with a previous employer by sharing secrets or by taking a job at their company. In some cases, employers can recover damages from both the former employees and their new employers who collaborate with them in the transgressions.

Although the laws differ from state to state, general principles apply to non-compete contracts in most jurisdictions. Here are some considerations to keep in mind:

* Rule of Reasonableness: In order to be valid, a non-compete agreement must be reasonable. Courts recognize that employers have a legitimate interest in protecting the time, investment, and other resources they have invested in employees, but that interest must be balanced against employees’ job mobility in a free enterprise system. Courts generally will scrutinize non-compete agreements carefully to make sure that they are geared to protect the reasonable business interests of an employer without unduly limiting an employee’s other work opportunities. Therefore, these arrangements must usually be tailored narrowly to restrict truly competitive activities without forbidding an employee from working in the same industry or profession in a way that is not competitive.

* Independent Consideration: In many states, a non-compete agreement is valid if entered into at any time after an employment relationship begins. But in some states, courts will not enforce non-compete agreements unless the employee gets what is termed “independent consideration” — in other words, if they get something in exchange for signing the agreement. If this principle applies in your state, a non-compete agreement will be valid only if it is signed at the time employment commences, or at a later date if the employer gives you some additional benefits such as increase in salary, promotion, or other items of value.

* Duration: In order to assure that these contracts are not too stifling, courts will generally require that they only last for a limited amount of time. The duration depends upon a number of circumstances, including how long it will take to train another employee to take over the position being vacated. Generally, non-compete agreements one or two years in length will be valid, and longer time periods may be suspect. Courts generally will permit longer non-compete periods in connection with a sale of a business when a new buyer insists that the old owner refrain from competing for a prescribed period of time. In these situations, courts reason that the parties should be permitted to negotiate whatever time frame they want since the exchange is less coercive than it is in an employer-employee relationship.

* Distance: In addition to duration, a non-compete agreement often must have reasonable geographic limits. In today’s global economy, the distance factor is less significant than it has been in the past. But if an employer has a particular market area, courts may refuse to enforce non-compete agreements that extend beyond that. For instance, a cosmetology business that draws most of its customers from a radius of 10 or 15 miles probably couldn’t limit a former employee from working in the cosmetology business outside of that market area.

* Blue Pencil Rule: Many courts follow the “blue pencil” rule, which means if an agreement is too restrictive, the courts can modify it and then enforce it. But in some states, the “blue pencil” rule is prohibited, and courts must either uphold non-compete agreements as drafted or invalidate them entirely.

* New Employer Liability: In many states, employers who lose an employee to a competitor in violation of a non-compete agreement can sue the new employer, as well as the old employee. In these states, employers are reluctant to hire away employees who have non-compete agreements. The best approach for employees in these states is to let their prospective new employer know about the non-compete so that the employer is not later “surprised” with a lawsuit by the old employer. The new employer may decide that the non-compete agreement is invalid, or may be willing to assist the employee, including payment of legal expenses, in the event of a lawsuit by the former employer.

While employees usually have little bargaining power when confronted with non-compete agreements, there are a number of steps they can take to minimize the impact of these restrictive devices. They should keep these – by cutnpaste4u

But in most states, reasonable agreements are enforced by the courts through orders that prohibit employees from engaging in conduct that violates non-competes. Employers also can be held liable if they hire someone who violates an agreement.

Although the laws differ from state to state, general principles apply to non-compete contracts in most jurisdictions. Here are some considerations to keep in mind:

* Rule of Reasonableness: In order to be valid, a non-compete agreement must be reasonable. Courts recognize that employers have a legitimate interest in protecting the time, investment, and other resources they have invested in employees, but that interest must be balanced against employees’ job mobility in a free enterprise system. Courts generally will scrutinize non-compete agreements carefully to make sure that they are geared to protect the reasonable business interests of an employer without unduly limiting an employee’s other work opportunities. Therefore, these arrangements must usually be tailored narrowly to restrict truly competitive activities without forbidding an employee from working in the same industry or profession in a way that is not competitive.

* Independent Consideration: In many states, a non-compete agreement is valid if entered into at any time after an employment relationship begins. But in some states, courts will not enforce non-compete agreements unless the employee gets what is termed “independent consideration” — in other words, if they get something in exchange for signing the agreement. If this principle applies in your state, a non-compete agreement will be valid only if it is signed at the time employment commences, or at a later date if the employer gives you some additional benefits such as increase in salary, promotion, or other items of value.

* Duration: In order to assure that these contracts are not too stifling, courts will generally require that they only last for a limited amount of time. The duration depends upon a number of circumstances, including how long it will take to train another employee to take over the position being vacated. Generally, non-compete agreements one or two years in length will be valid, and longer time periods may be suspect. Courts generally will permit longer non-compete periods in connection with a sale of a business when a new buyer insists that the old owner refrain from competing for a prescribed period of time. In these situations, courts reason that the parties should be permitted to negotiate whatever time frame they want since the exchange is less coercive than it is in an employer-employee relationship.

* Distance: In addition to duration, a non-compete agreement often must have reasonable geographic limits. In today’s global economy, the distance factor is less significant than it has been in the past. But if an employer has a particular market area, courts may refuse to enforce non-compete agreements that extend beyond that. For instance, a cosmetology business that draws most of its customers from a radius of 10 or 15 miles probably couldn’t limit a former employee from working in the cosmetology business outside of that market area.

* Blue Pencil Rule: Many courts follow the “blue pencil” rule, which means if an agreement is too restrictive, the courts can modify it and then enforce it. But in some states, the “blue pencil” rule is prohibited, and courts must either uphold non-compete agreements as drafted or invalidate them entirely.

* New Employer Liability: In many states, employers who lose an employee to a competitor in violation of a non-compete agreement can sue the new employer, as well as the old employee. In these states, employers are reluctant to hire away employees who have non-compete agreements. The best approach for employees in these states is to let their prospective new employer know about the non-compete so that the employer is not later “surprised” with a lawsuit by the old employer. The new employer may decide that the non-compete agreement is invalid, or may be willing to assist the employee, including payment of legal expenses, in the event of a lawsuit by the former employer. – by cutnpaste4u

Good for IT jobs(4:34pm EST Wed Jul 20 2005)If the court strikes down MS's confidentiality agreement, it could mean that MS could hire many more US workers. It would make a big difference. Just as if the courts would strike down the MS EULA would stop MS taxation and end MS's ducking product liability law. – by MS hurts everyone

right to work(5:38pm EST Wed Jul 20 2005)I thought these wern't enforcable in right to work states. – by k2h

huh(6:22pm EST Wed Jul 20 2005)so dr.lee, because of the contract wouldnt be able to work for sun,redhat,yahoo,apple,lycos,amazon,aol, and so on, since microsoft considers every software company a competitor. – by bla

re: bla(8:14pm EST Wed Jul 20 2005)Your correct!

This guy should be forced to work at McDonalds!!!!!! – by Ted

? and observation..(11:51pm EST Wed Jul 20 2005)How does it be that when a person of Chinese Decent goes from being a technology VP to a VP direction a country's operation he is a threat. As VP of all of the Chinese operations I find it hard to believe Dr Lee is going to be doing anythign terribly technical that will threaten MS… this is a symbolic shot across the bow to warn the low levels and staunch the defection of MS programers who are no longer going to get rich there but still toil for 100 hour weeks. Google and other startups offer a quick path to richest.

This will result in a brief slowdown but the trend is too powerfuly to top. MS has lost the leadership position as well as the ability to attract the very very best out of the box programers.

This is far different then say the TSMC / SMIC matter where people are going to exactly the same job across the strait.– by Observer

Y working for MSFT? — so structural!(2:07am EST Thu Jul 21 2005)Why bother considering MSFT? Lots of structures. When I went on-site interview @MSFT, I met SDE, SDE lead, SDE manager, etc… whereas in other IT firms it is more tree-style. Atmosphere is far free and hence better.

I see this as a warning sign to SDEs in MSFT. In the worst case, Dr. Lee just needs to spend 1 yr traveling through Asia again (if he hasn't done that yet), or start a speech-tour in universities in US/China/India. – by Ubuntu

the thing is(4:28am EST Thu Jul 21 2005)people are complaining that bla bla bla he should be able to do this bla bla bla, but ms would have said to him in the begining “if you want this job, sign the contract and abide by its rules, if you dont want to sign the contract you can get lost” so he decided that he would sign it and now he is under a legal binding and if he decides he wants to in any way break that legal binding microsoft should do everything thing in its power to protect its property. – by JoJoBoMoFo

Google will easily prove that MS does this twice a day(11:26am EST Thu Jul 21 2005)The thief is complaining that his loot is returned. Only janitors at MS don't work in the software industry again. How many MS outsourced job workers will not work in the industry after leaving? – by tech

Washington State(2:46pm EST Thu Jul 21 2005)Is a right to work state. They will make his life hell, but they can't touch him. – by Employed in Seattle

Hmm suing only because Bill feels violated(10:05pm EST Thu Jul 21 2005)It is all clear.. Dr Lee was a close confidant of Bill, he feels betrayed and wants payback..

Bill has revenge on his mind.. that is all – by Let him go Bill

PocketPC Fan – Yes I have..(11:31pm EST Thu Jul 21 2005)..been asked to sign a non-compete within the auto sector as an electrostatic systems operator, and as a paint formulist. Both times I refused. If I can't take another job somewhere else, I have no income of comparable value. They have no right to drop me down to “McDonalds” simply because I decide their future is not my future.

Both times, I was still hired. Both times, I eventually left to work with a competitor in a similar position. Again, if the employer is not keeping the employees, it is their problem for not being decent to their staff. Its not staff leaving “just in spite” so that they can run away with secrets. Stop being a damned conspiracy freak. – by NonCompeteTHIS!